Ex. 150 Presented below is a flexible manufacturing budget for Waner Company, which manufactures fine timepieces: Activity Index: Standard direct labor hours Variable costs2,0003,2003,6004,000 Indirect materials$ 4,000$ 6,400$ 7,200$ 8,000 Indirect labor2,3003,6804,1404,600 Utilities3,2005,1205,7606,400 Total variable Fixed costs9,50015,20017,10019,000 Supervisory salaries1,0001,0001,0001,000 Rent3,0003,0003,0003,000 Total fixed4,0004,0004,0004,000 Total costs$13,500$19,200$21,100$23,000 The company applies the overhead on the basis of direct labor hours at $6.00 per direct labor hour and the standard hours per timepiece is 1/2 hour each. The company's actual production was 5,600 timepieces with 2,900 actual hours of direct labor. Actual overhead was $17,700. Instructions (a)Compute the controllable and volume overhead variances. (b)Prepare the entries for manufacturing overhead during the period and the entry to recognize the overhead variances at the end of the period.
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